While traditional finance (TradFi) interest in blockchain, decentralized finance (DeFi), and other Web3 sectors have grown, its involvement with public blockchains conflicts with its dedication to privacy and regulatory compliance. This tension arises because public blockchains are, by nature, transparent and immutable, making it difficult for institutions to uphold the need for confidentiality that is integral to their operations.
As the vast majority of the industry’s liquidity is linked to public blockchains, this tampers with TradFi’s capacity to participate in DeFi and digital assets in legitimate and meaningful ways. The lack of privacy not only raises concerns about data protection but also puts banks at risk of non-compliance with regulations designed to safeguard consumer information.
So, how can financial institutions participate in this emerging, and possibly lucrative, asset class while keeping their customers’ privacy and information confidential?
To address this issue, Vixichain has created a Layer-1 blockchain solution that addresses TradFi’s reluctance to engage with public blockchains. The project recently raised $7 million from an ongoing private sale funding round to support its compliance-focused blockchain for institutional use.
With a goal to raise $11 million by the end of this year, the funds will allow Vixichain to expand its growing R&D initiatives, build strategic partnerships with an array of financial institutions, and realize its business roadmap before its upcoming DevNet and mainnet launches.
Discussing the importance of TradFi in the digital asset space, Ron Mayer, CEO and Founder of Vixichain says: «There is no way to achieve real mainstream Web3 adoption without involving financial institutions.»
Its permissioned blockchain protocol functions as a private network designed exclusively for institutional use, granting participants greater control, privacy, and transaction efficiency in a compliant manner. Vixichain works to onboard financial institutions that serve as network validators, and in return, banks receive transaction fees as an incentive for validating transactions.
The framework introduces a distinctive «non-fungible stable token» (NUSD), backed by fiat and held in a fully transparent bank trust. This is a traceable bridge between Vixichain’s private network and the Web3 ecosystem. By implementing an NFT-based stablecoin, this approach ensures institutional-level privacy and compliance while maintaining core access to DeFi and other crypto products and services.
Mayer adds: «Despite being centralized, banks bring a lot to the table, such as risk management strategies, liquidity, and credibility, which can’t be underestimated. Since most financial institutions are hesitant to interact with public blockchains due to legal and privacy concerns, Vixichain offers a secure environment that balances privacy and transparency while enabling them to engage with public blockchains.»
Powered by its native VIXC token, Vixichain’s ecosystem is supported by the Vixi Web3 Wallet, which enables end-users to store, send, and receive digital assets, allowing them to choose their institution of choice to validate transactions.
As TradFi’s interest in digital assets grows, innovative solutions are emerging that address the complexities of integrating TradFi with digital assets. These solutions streamline compliance processes, enhance security protocols, and improve user experience. As a result, more institutions welcome blockchain technology’s potential to expand their offerings in an evolving financial landscape.